Gnych v Polish Club Limited (No 2) [2013] NSWSC 1452

Supreme Court New South Wales

Medium Neutral Citation: Gnych v Polish Club Limited (No 2) [2013] NSWSC 1452 Hearing dates: 30 September 2013 Decision date: 30 September 2013 Jurisdiction: Equity Division Before: Ball J Decision: See paragraphs 10 and 17 of this judgment. Catchwords: REAL PROPERTY - determining the terms of a licence agreement - no issue of general principle. PRACTICE AND PROCEDURE - whether orders should be stayed pending an appeal Legislation Cited: Conveyancing Act 1919 (NSW) Cases Cited: Alexander v Cambridge Credit Corp Ltd (1985) 2 NSWLR 685 Evans v Cleveland Investment Global Ltd (2013) NSWCA 230 Gnych v Polish Club Limited [2013] NSWSC 1249 Category: Procedural and other rulings Parties: Jacek Gnych (First Plaintiff) Sylwia Gnych (Second Plaintiff) Polish Club Limited ACN 000 469 385 (Defendant) Representation: Counsel: GP Segal (Plaintiffs) VR Gray (Defendant) Solicitors: Drexler & Partners (Plaintiffs) Strathfield Law (Defendant) File Number(s): 2013/240942 Publication restriction: Nil

EX TEMPORE Judgment 1Between 31 March 2012 and 5 August 2013, the plaintiff operated a restaurant on the first floor of premises owned by the defendant club in Norton Street, Ashfield. The rest of the building is used by the club for the benefit of its members. 2The plaintiffs were excluded from the restaurant area on about 5 August 2013. They then commenced this proceeding for a declaration that they were entitled to a lease of that part of the premises they had occupied and for an injunction restraining the defendant from interfering with their rights of exclusive possession. In a judgment I delivered on 5 September 2013 (Gnych v Polish Club Limited [2013] NSWSC 1249) I concluded that the plaintiffs were entitled to relief substantially in the terms they sought. 3Two issues remain outstanding. The first is the precise terms of the orders that should be made. The second is whether the orders should be stayed pending an appeal. 4So far as the first issue is concerned, I concluded that the plaintiffs were entitled to an injunction restraining the defendants from interfering with their rights of exclusive possession of the restaurant area and associated areas. I also concluded that the plaintiffs were entitled to an order for specific performance of an agreement to licence an area known as the Mirror Room for a period of five years from 31 March 2012. 5The parties agree on the terms of the orders which give effect to my judgment so far as the lease of the restaurant and associated areas are concerned. There is, however, a dispute concerning the terms on which the licence was granted. I have heard further evidence concerning that dispute. 6The plaintiffs' position is that they are entitled to use the Mirror Room on Friday, Saturday and Sunday, but they have permitted the club to use that room on those days when they were not using it themselves and they have been happy to try to accommodate the club where they were able to. 7The club's position is that there was an arrangement in place where either party could book to use the Mirror Room on Friday, Saturday or Sunday and that whoever first booked the room by having the booking recorded in a diary kept by Mr Romanowski, the club manager, was entitled to use it. 8I prefer the plaintiffs' evidence on this point. As I explained in my earlier judgment, on 6 December 2011 the plaintiffs' solicitor sent the club a term sheet. The club resolved to accept that term sheet on the same day and it may be inferred from what happened subsequently that that acceptance was communicated to the plaintiffs. The term sheet records under the heading "Licence Agreement" the words "for use of small hall area [that is, the Mirror Room] adjacent to the restaurant on Frid/Sat/Sun". 9The evidence of the first plaintiff is that the plaintiffs opened the folding doors between the restaurant and Mirror Room (mostly on Sundays) to permit the restaurant to expand into the Mirror Room when the restaurant area was full without seeking permission from the club. The first plaintiff's evidence is also that the club sought permission from the plaintiffs to use the Mirror Room at times when the plaintiffs might otherwise have used the Mirror Room themselves. 10I accept the first plaintiff's evidence. It is consistent with the term sheet. In my opinion, it was a term of the licence that the plaintiffs were entitled to use the Mirror Room on Friday, Saturday and Sunday during the normal opening hours of the restaurant and for the purpose of functions. I am satisfied that the orders proposed by the plaintiffs give effect to that agreement. 11In relation to the question of a stay, the general principle is that a successful plaintiff should be entitled to the benefit of the judgment he or she has obtained. It is for the defendant to identify circumstances that justify a departure from that general principle. However, the defendant does not have to establish that the circumstances are special or exceptional: see Alexander v Cambridge Credit Corp Ltd (1985) 2 NSWLR 685 at 694, which was quoted with approval in Evans v Cleveland Investment Global Ltd (2013) NSWCA 230 at [9]. 12In this case the club submits that a stay is justified because it has strong prospects of success on appeal and it may become insolvent if a stay is not granted. The prospects of success on appeal are very relevant. However, in my opinion, it would be a rare case where the prospects of success on appeal alone were sufficient to justify a stay. There must be something more which goes to the court's ability to undo the effects of a judgment that is later found to be in error or that goes to the effect of the judgment on the parties in the meantime. 13The defendant says that if the court does not grant a stay, the club will become insolvent in a relatively short period of time. In support of that assertion Mr Konopka, the treasurer of the club, says the club made a trading loss in the financial years ending 30 June 2012 and 30 June 2013 and only had an overall surplus in those years because of a bequest or bequests. Mr Konopka says that the club has only returned to making a monthly trading profit since the plaintiffs were evicted. However, no explanation is given for how that has come about and I am not prepared to infer that it is a result of the plaintiffs' eviction. The accounts of the club that were tendered, in my opinion, do not support that conclusion. 14Mr Konopka also asserts that there is no means by which the club could raise additional funds pending the appeal to make up for any trading losses it suffers. Again, however, that evidence is little more than assertion. There is no evidence concerning the monthly deficit that would need to be funded going forward and what investigations the club has taken to see whether it could fund that deficit pending an appeal if a stay is not granted. 15If a stay is granted it will cause considerable hardship to the plaintiffs. They have continuing liabilities in respect of the restaurant. It is difficult for them to seek alternative employment pending an appeal since, understandably, they would want to be in a position to run the restaurant if the appeal fails. In addition, if a stay is granted and they are ultimately successful on appeal, it will be difficult to calculate the profit they would have earned during the period of the stay. 16The defendant submits that an appeal could be heard within eight weeks. Whether that is the case is unclear. However, it seems to me that the submission is neutral in any event since it demonstrates that, to the extent that the club suffers from any detriment if a stay is not granted, the period of that detriment is likely to be short. 17I accept that the defendant has reasonable prospects of success on appeal. However, even if I were to accept that the club faces considerable hardship if a stay is not granted, the plaintiffs face considerable hardship if one is granted. The fact remains that the plaintiffs were successful before me. In those circumstances, I am not satisfied that a stay is warranted.